Bally CEO gains support from shareholder

Backing may derail efforts to oust Tobak at annual meeting

(Crain's)  The effort by a dissident shareholder of Bally Total Fitness Holding Corp. to fire the company's CEO by proxy suffered a major setback today as the firm's third-largest shareholder said he was supportive of management's turnaround efforts at the fitness club operator.

In a letter to Bally Chairman and CEO Paul A. Toback, Mark Wattles said, "it is clear to me that at a minimum a foundation is being laid by current management for a successful turnaround of this Company."

That's a promising development for Mr. Toback, who is trying to fend off a proxy campaign to have him fired by his second-largest holder, Los Angles-based Liberation Investment Group. Liberation's proposal requires 75% of all votes cast to support firing Mr. Toback, a level that will be difficult to reach without Mr. Wattles' 9% stake.

But Mr. Wattles' letter wasn't all good news for Bally's management. He said he was inclined to vote in favor of director nominee Don Kornstein, who was put forward by No. 1 shareholder Pardus Capital Management despite the company's objections. Mr. Wattles said that he hoped Mr. Kornstein, who has longstanding ties to Mr. Pearlman, would lead the committee of the company's board charged with selling the company.